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U.S. Supreme Court Rules Against Public-Sector Union Fees

Volume 17, Issue 13
June 29, 2018

On June 27, 2018, the United States Supreme Court ruled in Janus v. American Federation of State, County and Municipal Employees, that public-sector unions can no longer require nonunion members to pay agency fees to the union. The Court concluded that the First Amendment is violated when money is taken from nonmember employees. Thus, no payment can be required by a public-sector union from employees who choose not to join the union. The Court specifically overruled its 1977 decision in Abood v. Detroit Board of Education, finding that it was "inconsistent with other First Amendment cases," was "poorly reasoned" and "has led to practical problems and abuse."

The decision in Janus focused on an Illinois law that permits a public-sector union to assess an "agency fee" against employees who choose not to join the union. This fee could compensate a union for the costs incurred in "the collective bargaining process, contract administration[,] and pursuing matters affecting wages, hours[,] and conditions of employment." It could not, however, be used to pay union expenditures "related to the election or support of any candidate for political office."

Mark Janus, an employee of the Illinois Department of Healthcare and Family Services, refused to join the American Federation of State, County, and Municipal Employees, which represents Illinois state employees, because he disagreed with its position on collective bargaining and public policy issues. Under his unit’s collective bargaining agreement, however, he was still required to pay 78.06% of full union dues - $44.58 per month - as an agency fee. Janus and the Governor of Illinois argued in a lawsuit that nonmember fee deductions are "coerced political speech" and that "the First Amendment forbids coercing any money from the nonmembers." The trial court and the Seventh Circuit Court of Appeals dismissed the lawsuit by relying on the 1977 Abood decision which found such fees constitutional.

The U.S. Supreme Court agreed with Janus and the Governor. The Court explained that "[c]ompelling a person to subsidize the speech of other private speakers" constitutes a "significant impingement on First Amendment rights." The Court quoted Thomas Jefferson as writing: "to compel a man to furnish contributions of money for the propagation of opinions which he disbelieves and abhor[s] is sinful and tyrannical." While impingement on constitutional rights may be permitted for compelling reasons, the Court rejected each justification for agency fees as insufficient to permit the constitutional restriction, repeatedly pointing out that unions representing federal employees and employees in states that prohibit agency fees operate in much the same way as unions collecting agency fees. In other words, fears regarding "labor peace" and "free riders" are not sufficient to permit a restriction on such an important constitutional right and can be addressed through other, less restrictive, means.

The Court concluded that agency fees violate the First Amendment and cannot continue. No payment to a public-sector union may be deducted from a nonmember’s wages unless the employee clearly and affirmatively consents to pay and thereby waives his/her First Amendment rights. Addressing the big picture, the Court recognized "that the loss of payments from nonmembers may cause unions to experience unpleasant transition costs in the short term, and may require unions to make adjustments in order to attract and retain members." However, it weighed "these disadvantages against the considerable windfall that unions have received under Abood for the past 41 years." The Court concluded: "It is hard to estimate how many billions of dollars have been taken from nonmembers and transferred to public-sector unions in violation of the First Amendment. Those unconstitutional exactions cannot be allowed to continue indefinitely."

The likely political impact of this decision is huge. From a labor relations standpoint, however, the decision does not immediately change anything for Nevada public employers because Nevada law does not permit agency fees. Nevertheless, as unions grapple with the reduction in revenue, keep an eye out for proposed legislation to aid unions and attempts to raise revenue in other ways.

KZA Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.